The alcohol industry is a challenging business. Whether you’re are in the beer, wine or spirits business, there are many current trends that pose huge challenges as we enter into 2020.
The shifts that are happening don’t only affect those in the United States. In fact, the challenges are present in all corners of the world. In fact, there’s currently a good measure of influence from the European alcohol industry and the population’s attitude toward consuming alcoholic beverages that will impact how business is done in the U.S.
Additionally, lawmakers are crafting legislation every day that distributors and distillers are forced to comply with if they want to reach customers. In this article, we’ll get into detail about the seven challenges the alcohol industry needs to solve in 2020.
1. Creating an Effective Online Presence
Tradition is at the very heart of how beer, wine and spirits are distributed and marketed. While the vast majority of industries are succeeding online to reach broader markets, the alcohol industry is still attempting to carve out a unique presence. While some alcohol brands have created a successful online presence on their own, others have found that it helps to create strategic partnerships.
In the U.S., online efforts pale in comparison to many foreign competitors. To compete, U.S. companies need to adopt a feeling of luxury and convenience in their online marketing strategies if they hope to remain competitive.
2. Customers Look For Ethical Brands
Assuming that a customer is 21 or older, alcoholic beverages transcend all age and gender lines. In 2020, customers are becoming more conscientious about buying alcoholic beverages that are marketed as gender-neutral.
We’ve seen this trend happening in many other areas of the business world. In the alcohol industry, Johnny Walker has stayed a step ahead of the trend by introducing a revamped logo that depicts a female.
The truth is, drinking alcoholic beverages is no longer a male-dominated market. If you’re looking to remain relevant and grow your business, it’s time to tailor more marketing campaigns to be socially inclusive. It will broaden your demographic appeal and open your brand up to new markets.
3. There’s More Competition Than Ever… and It’s Not What You Think
Almost every day, new legislation is developed across the U.S. that makes buying and using cannabis completely legal. The rising popularity of cannabis has hampered the growth of the alcoholic beverages industry.
It’s interesting to note, however, that women (who make up a substantial portion of U.S. alcohol consumers) aren’t leading the way towards the shift to cannabis. In general, women still prefer wine and spirits.
For alcoholic beverage companies to remain relevant and competitive during this time of cannabis popularity, they’ll need to focus on attracting as many female consumers as possible. The male market certainly isn’t going to disappear, but the female market is where you can find the most growth.
4. Dealing with Regulations
If you’re conducting business within the United States, dealing with regulations is the biggest challenge of doing business in the alcohol industry.
Beyond the stacks upon stacks of federal laws, you also need to comply with state and local laws in order to sell your product. On top of that, excess taxation can quickly kill a developing business model.
These rules vary from state to state. If possible, move your operations to a state that is less restricting toward alcohol regulations.
5. Smaller Portions and Moderation
With the overall rise in the consumption of cannabis and the competition it brings, the alcoholic beverage industry needs to consider how it packages its product in a mindful way for customers.
Cannabis is touted as a healthier alternative to alcohol. For the beverage industry to compete, they’ll need to take calculated measures that market smaller packaging sizes and serving options.
The industry also faces a moderation movement. By offering smaller serving options, you can balance the consumer moderation desire in both new and mature drinkers.
6. It’s Time for Direct-To-Consumer Marketing
Traditionally, alcohol that’s sold in stores has relied on the three-tier distribution model. Essentially, that means that an alcohol manufacturer must sell their product to distributors that then sell to the retailers. Because of this model, only top-level brands have had the opportunity to be distributed nationally.
However, U.S. law states that wine and other beverages that are lower in alcohol content can get around this system by selling directly to consumers. Many winemakers have already been doing this on a national and international scale through subscription wine clubs.
For direct-to-consumer brands of alcohol, the challenge lies in getting a buyer to purchase a brand of drink online when they’ve never tasted it. Direct-to-consumer style and branding can help combat this challenge.
When the brand Haus recently launched an online campaign, they aimed their branding and marketing strategies directly toward more affluent millennials. They hired direct-to-consumer agency Gin Lane as a branding partner to sell their $35 bottles of alcohol.
The brand is now cleverly positioned as a health-conscious, online-only hard alcohol alternative.
7. How to Add to Other Consumer Experiences
Promoting your brand of alcohol doesn’t require that you completely reinvent the wheel. In reality, the best approach is often to go exactly where people are already enjoying alcoholic products.
There are many brands of alcohol that find incredibly receptive customers at music festivals, sporting events and large seasonal gatherings. By adding to an attendee’s fun experience, these brands know how to secure their place in the memories of consumers. It makes an impression that lasts.
Major beer brands are known for implementing this strategy. Bud Light, for example, routinely sponsors parades for cities that are celebrating a sports championship. As fans enjoy the day, they can enjoy a complimentary Budweiser product.
Other alcohol brands have taken note of this practice and are working to build better awareness from it.
The Alcohol Industry Is Constantly Evolving
As we enter into a new year, pay attention to these seven common challenges facing the alcohol industry. You’re not the only one dealing with them. As an industry, we can start to solve them.